North American Businesses Braced for Increased Currency Volatility in
2017: AFEX Survey

Majority (56%) expect currency volatility to increase in the
coming year due to increasing geo-political risk, coupled with a third
(32%) citing it as the biggest challenge to managing risk

March 08, 2017 08:00 AM Eastern Standard Time

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--AFEX, one of the world’s largest non-bank providers of global payment
and risk management solutions, today announced the results of its third
annual Currency
Risk Outlook Survey, which reveals that North American SMEs are
concerned and alert to the currency risks brought on by increasing
global political uncertainty.

The survey questioned more than 650 financial decision makers globally
at SMEs engaged in international commerce about their attitudes towards
global trade, foreign exchange risk and their methods of managing it.

Preparing to thrive despite global uncertaintyA majority
(56%) of North American businesses surveyed expect currency volatility
to increase in the coming year, while nearly one third (32%) cited
currency volatility as the biggest challenge to managing currency risk.

Despite the expected increase in volatility, companies see themselves as
well positioned to deal with this unpredictability, as 32% expect to
increase international trade in 2017.

Asked which global events have most affected their company’s risk
mitigation strategy over the last 12 months, North American clients
cited U.S. monetary policy (36%), the 2016 U.S. presidential election
(28%), the ‘Brexit’ referendum (16%), and European monetary policy (16%)
as the primary factors.

“Concerns over currency volatility dominate this report given the major
political events that transpired in 2016, namely the Brexit referendum
and the U.S. election, as well as uncertainty regarding U.S. and UK
monetary policy,” said Jan Vlietstra, Chief Executive Officer for AFEX.
“However, the findings reveal that many businesses have tools in place
and are taking an active approach to managing their currency risks, in
order to not only stay afloat, but to continue the pursuit of
international growth.”

Managing foreign exchange riskAlthough an active approach
to managing currency risk is enabling North American businesses to take
advantage of opportunities around the globe in any economic climate,
managing that risk is also at the core of protecting the business
itself. Thirty-nine per cent of respondents have at least half of their
revenue exposed to foreign currencies, while 11% are fully exposed
(100%).

Nearly all (95%) respondents in North America indicated that they intend
to either maintain (66%) or increase (29%) their use of risk mitigation
strategies in 2017.

Twenty-three percent are planning to make use of forward contracts,
which allow firms to lock in a price for up to 12 months in advance to
provide certainty and protect a business’s bottom line, while one in
five (22%) intend to pass currency risks on to their suppliers and
customers.

Unsurprisingly, the biggest challenges to mitigating currency risk cited
by North American respondents were global economic policy uncertainty
(51%) and currency volatility (50%).

The challenges highlight the advantage for businesses in utilizing
flexible, effective tools to manage currency exposures, as well as
having access to advisors with deep industry expertise, coupled with
knowledge of their clients.

“As indicated by the survey results, businesses are expecting more
volatility in the coming year, but they aren’t letting that deter their
growth ambitions,” said AFEX’s Americas General Manager Christian
Spaltenstein. ”AFEX is dedicated to supporting our clients holistically,
encompassing payment efficiency, FX expertise and timely and sound
advice.”

About the surveyAFEX polled clients based in the United
States, Canada, the United Kingdom and Australia, and across a wide
range of industries, to determine their perspectives on currency risk
and what strategies they employ to mitigate that risk. The survey was
conducted from January 17th, through February 2nd 2017, with 662
respondents in total. Click
here to view the full results.

About AFEXEstablished in 1979, AFEX is a leading global
payment and risk management solutions provider that specializes in
cross-border transactions and provides market expertise and unrivalled
customer service for businesses and private clients. With a client base
of over 35,000 active commercial customers worldwide, AFEX prides itself
on tailoring its payment and foreign exchange services to meet its
clients’ needs. AFEX’s online payment platform - AFEXDirect provides
clients with one consolidated overview of their currency exposure and
makes it easy for companies to manage international invoices. AFEX
maintains offices across the Americas, EMEA and Asia Pacific.